Five Things You Need to Know About Janet Yellen

1. She has pushed the Fed to use aggressive new policies to boost the economy. Ms. Yellen, who focused much of her academic research on the costs and causes of unemployment, has consistently called for the Fed to respond forcefully to high joblessness. She argues that inflation isn’t likely to emerge with the economy in such a debilitated state – a point on which so far she has been right. “These are not just statistics to me. We know that long-term unemployment is devastating to workers and their families,” she said in a speech to the AFL-CIO labor union in February.

2. She has a record of being concerned about excessive inflation. Her public statements and past actions show she is committed to maintaining low inflation. The Fed “is determined to ensure that we never again repeat the experience of the late 1960s and 1970s, when the Federal Reserve didn’t respond forcefully enough to rising inflation,” she said in a 2011 speech.

She was a longstanding proponent of the Fed adopting a 2% inflation target, and was closely involved in the decision to do so in 2012. In 1996, while a Fed governor, Ms. Yellen debated then-Chairman Alan Greenspan over the right level of inflation, contending that too-low inflation could harm the economy just as too-high inflation could — a view that is now widely accepted at the Fed, but wasn’t then. Later that year, she urged Mr. Greenspan to raise short-term interest rates, fearing the booming economy threatened to unleash excessive inflation — advice he declined, according to former Fed governor Laurence Meyer.

3. She is a good forecaster. The Fed must forecast growth, inflation and unemployment to make policy decisions. Ms. Yellen has produced the most accurate forecasts of all the current Fed officials from 2009 through 2013, a Wall Street Journal analysis found.

4. The financial crisis made her a believer in tougher financial regulations: Ms. Yellen has said that the 2008 financial crisis, which occurred when she was president of the San Francisco Fed, transformed her from a somewhat “docile” regional bank regulator to a believer that firm rules are more effective than leaving it up to regulators to react when trouble appears on the horizon.

“This experience has strongly inclined me toward tougher standards and built-in rules that will kick into effect automatically when things like this happen that make tightening up a less discretionary matter,” she told the congressionally-created Financial Crisis Inquiry Commission in a 2010 interview in which she expressed frustration at how long it took the Fed and other regulators to negotiate and issue new rules.

In a June speech, she said the Fed might need to require the nation’s largest, most complex banks to carry even fatter capital cushions against losses than required by new rules set out by international regulators, a prospect hotly contested by big U.S. banks.

5. She believes in transparency, and the markets thinks she’s a good communicator. In 2010, Mr. Bernanke asked Ms. Yellen to lead an internal communications committee that has produced several innovations in the way the central bank articulates its goals and policy plans to the public. These include so-called forward-guidance in which the Fed makes statements about the likely future course of policy, which has evolved to employ specific unemployment and inflation thresholds; the regular press conferences Mr. Bernanke holds; and a longer-run goals and strategy document released in January 2012 that laid out, for the first time, the rates of inflation and joblessness the Fed finds to be consistent with its mandate from Congress.

Market participants think she does a good job of explaining the central bank’s thinking. In two separate surveys last year, officials at primary dealers — banks that do business directly with the Fed — responded to general questions about the Fed’s communications by saying Ms. Yellen’s speeches were particularly helpful.

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